McCrory withholding judgment on Medicaid expansion

By By MICHAEL BIESECKER and EMERY P. DALESIOThursday January 31, 2013 4:30 PM

RALEIGH, N.C. (AP) — Gov. Pat McCrory said Thursday he is withholding judgment on whether North Carolina should expand Medicaid coverage under the federal Affordable Care Act, even as fellow Republicans in the state legislature move to block the expansion.

McCrory spoke Thursday as State Auditor Beth Wood, a Democrat, released a 70-page critique of the Division of Medical Assistance, which oversees state spending on the health insurance program for low income families that's jointly funded by the state and federal government.

The Republican who took office Jan. 5 said he doesn't intend to make a decision on Medicaid expansion until his administration has an opportunity to fix management issues discussed in the audit. States can choose whether to accept federal money to expand Medicaid rolls under the federal health overhaul signed into law by President Barack Obama in 2010.

"This audit reinforces the fact that we cannot expand Medicaid and put more North Carolinians into this system without first addressing many of the underlying issues costing the taxpayers millions of dollars every day," McCrory said. "My total focus is going to be on reforming Medicaid. After we fix the system that we have we will go through a thorough review of other options that are available for us."

The audit found that administrative spending for North Carolina's Medicaid system is significantly higher than nine states of similar size. The audit also found state Medicaid administrators used flawed or incomplete budget forecasting methods, helping contribute to a $418 million shortfall with the program last year. Legislators ordered the audit to examine whether the state's Medicaid program is effective and complies with federal regulations.

Medicaid provides health coverage for more than 1.5 million North Carolina residents — most of them poor children, older adults and the disabled. The program spends about $13 billion in state and federal funds.

If North Carolina were to expand Medicaid, another 650,000 uninsured state residents could qualify for government health coverage.

On Thursday, a panel in the GOP-controlled state Senate moved ahead with legislation that seeks to rule out expanding Medicaid. The measure set for a Senate vote next week also would leave it to the federal government to build the state's online marketplace for private health insurance. Democrats complained that the move contradicted a common GOP insistence on local control.

"This bill is going to determine how we do Medicaid expansion, and that is simple — we're not going to do it," said bill sponsor Sen. Tom Apodaca, R-Henderson.

The health overhaul law requires the establishment of health exchanges — online marketplaces where people can shop for health insurance, much of which would be government-subsidized. If a state doesn't set up an exchange, the federal government will run an exchange for that state.

The U.S. Supreme Court upheld most of the law last summer but ruled that expansion of Medicaid would be optional for each state, rather than mandatory. The expansion would cover people up to 138 percent of the federal poverty level, or about $15,000 in annual income for an individual.

Under the bill, the federal government will repay states all costs related to the expansion for three years and 90 percent thereafter. But opponents say Washington could back out of that promise, leaving states to shoulder the burden alone.

A report this month by consultants hired by the state Department of Health and Human Services said the influx of federal Medicaid funds would result in doctors, drug makers, pharmacies, and medical equipment sellers increasing hiring, and the salaries paid the extra workers would add about $1.4 billion to North Carolina's economy. Total employment would increase by about 23,000 jobs, according to Regional Economic Models Inc., a Washington-based firm

Apodaca said he didn't believe Medicaid expansion would create new jobs overall because growth in health care spending would come from higher health insurance rates for other employers.

"The business people of this world are going to be paying for this. It may create jobs. But as I said yesterday, there's no free money," Apodaca said. "There's especially no free money out of Washington when you attach all the rules and regs to it."

Democrats favoring Medicaid expansion said losing the money also means more trouble for hospitals struggling with unpaid bills left after treating poor people.

Sen. Michael Walters said he represents two of the state's poorest counties in Robeson and Columbus, and Medicaid or Medicare pays the bills for about three-quarters of the patients receiving care at Columbus Regional Hospital in Whiteville. Foregoing the offered Medicaid expansion threatens to take away payments community hospitals badly need, Walters said.

"If we make these elections are we prepared as a state to set the responsibility to protect these rural hospitals?" said Walters, D-Robeson. "Are we going to protect the poor counties of this state and make sure they have the proper health care we deserve? That's the question I have. Are we willing to accept that responsibility today? I think that's the way we're headed."

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